Question

Explain leasing as a source of short-term finance.

Answer 1

Leasing is a short‑term finance method where a firm obtains the use of fixed assets (e.g., machines, vehicles, computers) from a leasing company (lessor) in return for periodic lease payments; the lessor provides the finance and the asset itself acts as security. Leasing lets a business use equipment without a large upfront purchase, with ownership usually remaining with the leasing company while the lessee repays by rentals/interest.